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Could someone check my understanding please:

Calculating index linking

17. An index-linked value will be calculated as V x B/A where:

(a) 'V' is the value of the Certificate at the beginning of the index-linked period (this will be the purchase price or the value at an anniversary date);

(B) 'A' is the RPI start level and is the index figure applicable to the calendar month in which the first day of the index-linked period falls (this day will be the purchase date or an anniversary of it); and

© ‘B’ is the RPI end level and is the index figure applicable to the calendar month in which the day after the final day of the index-linked period falls. This will be the maturity date, an anniversary date, or the day after the last completed month for which index-linking is earned.

In the event of this calculation producing a negative value, no index-linking will be applied.

So if i bought now with rpi at roughly 5%, and rpi is the same on an anniversary valuation, "index linking" would be a multiplier of 1, so i would only earn the interest over inflation on my investment? Doesn't seem like a very good investment if that is the case.

Mods, sorry this is on the main forum page, but i am hoping for a quick answer. :)


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